Vodafone accused of exploiting rival

Scandal-hit US telecoms group WorldCom says British firm abused its power

WorldCom, the US telecoms company exposed for fraudulent accounting, has accused Vodafone of "engaging in exploitative practices".

The allegation is contained in an eight-page letter to the telecoms regulator Oftel, in which it claims that the British mobile phone company has used its power to squeeze rival telecoms operators.

The complaint centres on a contract between Vodafone and WorldCom, which was "signed under protest" last December. In it, Vodafone agreed to connect calls made from WorldCom's telephone network to its mobile customers.

But the contract also included clauses requiring WorldCom to provide bank guarantees and advance cash payments to Vodafone. The mobile operator inserted the clauses as it was concerned about doing business with financially shaky companies.

WorldCom, headed by the former head of Compaq, Michael Capellas, is still in US Chapter 11 bankruptcy protection after it inflated earnings by $11bn (£6.6bn). It is expected to emerge from Chapter 11 before the end of the year after agreeing to pay $500m to settle civil charges.

Despite its own controversial past, WorldCom believes Vodafone has overstepped the mark. "Vodafone has both the incentive and the opportunity to abuse the application," it says in its letter. "We submit that Vodafone is engaging in exploitative practices to the direct detriment of its customers."

Vodafone and WorldCom both refused to comment.

WorldCom, currently rebranding itself as MCI, claims Vodafone's contract places "substantial costs" on other operators, "while at the same time improving Vodafone's cash flow and minimising (if not eliminating) its bad debt exposure".

The attack on Vodafone is being masterminded by Andrew MacLeod, the new European head of WorldCom and former chief operating officer of Cable & Wireless's troubled Global operation.

NTL, which exited Chapter 11 in January, is also worried about Vodafone's new contract. In a separate letter to Oftel, the cable operator said the contract sets a "very damaging precedent". NTL argues that if BT followed suit, it would have a "catastrophic" effect on rival telecoms companies, potentially forcing some out of the market. "We suspect that BT will attempt to revise its own policy," says NTL.

The letters, sent earlier this month, are in response to a draft ruling by Oftel. It broadly supported Vodafone's new contract, but said the company should take into account fac-tors such as payment history when carrying out credit assessments on other operators.

Oftel is due to make its final ruling next month.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there